Coal carves a place in energy future

ALBANIA, COLOMBIA - Its gray and black walls stretching to infinity, Latin America's largest coal mine resembles a miniature Grand Canyon.

The big difference is that the timeless hand of nature has not carved out El Cerrejon mine.

Booming global demand has.

A fleet of electric shovels runs 24 hours a day scooping up 50 tons of coal at a swipe. The rock is loaded onto 100-car trains that roll nine times a day to a private Caribbean port, where it is placed on cargo ships that deliver it to power plants in Chile, the Netherlands, Japan, the United States' Eastern Seaboard and elsewhere.

As the global price of oil and natural gas soars, some customers are taking a new look at other fuels - including coal. And countries such as China and India, whose demand is contributing to the price of petroleum, need even more energy. Besides petroleum products, they are buying vast amounts of coal, as well.

The worldwide demand for oil has its own set of environmental consequences - drilling in pristine areas where it previously was uneconomical and continued emission of greenhouse gases. But environmentalists warn that renewed reliance on coal takes the threat to another level.

"Growing coal use threatens nothing less than the end of civilization as we know it," said Henry Henderson, the Chicago-based Midwest director of the Natural Resources Defense Council.

Low in acid-rain-causing sulfur and cheap to produce, Colombia's coal has always been coveted. These days, El Cerrejon and half a dozen other major mines in the region are booming. Energy & Mines Minister Hernan Martinez says Colombia's shipments will rise to 80 million tons this year, 10% more than last year and double the amount just five years ago.

The value of Colombia's coal exports in 2008 will surpass $5 billion, up 40% from last year and 10 times what it was six years ago, a reflection of the increased price. Coal has more than doubled in price to $100 a ton in a year.

China added more coal-burning power plants in 2007 than Britain has built in its history, said Gerard McCloskey, a coal market specialist with Cambridge Energy Research Associates in London. A few years ago, China was exporting the equivalent of Colombia's current annual exports. But by next year, the U.S. Department of Energy forecasts, it will become a net importer.

Similarly, Russia and Poland are keeping much of the coal they once exported. Prices have also been driven up by flooded mines in Australia and a hike in global shipping rates.

Still, generating energy from coal costs a third as much as from natural gas in Japan, and half to two-thirds as much in Britain, McCloskey said.

According to John Dean, coal energy consultant with Global Insight, a research firm in Frederick, Md., those favorable economics have persuaded several U.S. utilities to build new or expand coal-fired power plants.

Probably the largest project is Duke Energy's two coal-fired generation plants in Cliffside, N.C., which by 2012 will produce 1,600 megawatts of energy - more than the output of the San Onofre nuclear power plant near San Clemente.

By 2030, about 54% of all U.S. electric power will be coal-fired, up from the current 48%, according to the National Mining Assn., a Washington-based trade group. Environmentalists and consumer advocates warn of the consequences.

Customers are beginning to see higher electric bills. Much more pain is on the way, according to U.S. Department of Energy economist Michael Mellish. "Coal prices have taken off with a vengeance and electricity prices will spike up if they stick," Mellish said.

Of longer-term concern are the effects on climate change. Coal-fired power generation and manufacturing is the leading source of carbon dioxide and methane emissions, which scientists agree are the leading contributors to the "greenhouse effect" and global warming.

Two environmental advocacy groups, Greenpeace and Natural Resources Defense Council (NRDC), have called for a moratorium on new coal-fired plants until a feasible means of mitigating carbon dioxide emissions is in place.

One such method, called "carbon capture and sequestering," which recycles carbon dioxide from smokestacks for use or storage underground, has raised hopes. But the National Mining Assn. says its practical application is 12 to 15 years away.

"We recognize coal is a reality to which you can't simply say no," said the NRDC'S Henderson. "But you have the issue of getting coal right, or of many, many other things going wrong."

Kate Smolski, legislative coordinator with Greenpeace in Washington, said that although all fossil fuels contribute to global warming, coal is the "dirtiest, emitting double the carbon dioxide per energy unit produced, compared with natural gas."

A mid-sized coal mine that produces 500 megawatts of energy, the amount consumed by 500,000 families, will churn out as much carbon dioxide a year as half a million cars, according to the NRDC.

Located in sparsely populated northern Colombia, the El Cerrejon mine, rail line and port were built in the late 1970s by Exxon according to U.S. standards. El Cerrejon has generally been credited with being environmentally kind, as coal mines go. (ExxonMobil sold the mine in 2002 to a partnership of Australia's BHP Billiton and two London-based firms, Anglo American and Xstrata.)

The owners say they are making an effort to reclaim the areas already stripped by planting trees and pasture, predicting that they will be habitable decades from now when the coal is gone.

But other areas of Colombia, particularly the historic port city of Santa Marta and its surrounding beach areas, are suffering spills and barge sinkings, which have damaged fishing and tourism along the country's Caribbean coast. The government is requiring all mines to use direct loading systems like El Cerrejon's by 2010, but some in the industry say the goal is unrealistic.

For now, Colombia is reaping a windfall. Known for legal exports such as coffee, bananas and oil as well as illegal tonnage of cocaine, it has quietly become a world player in coal, ranking fourth among exporters, behind Indonesia, Australia and Russia.

El Cerrejon's owners are considering investing $600 million in a second docking facility at Puerto Bolivar and a major expansion of its railroad line.

The Colombian government is sharing the wealth. El Cerrejon will pay royalties totaling $380 million to the government this year.

"The industry invested billions of dollars in an area of Colombia where there was once nothing, and it's paid off," Martinez said.